Trump executive order healthcare promises millions of people an alternative to Obamacare that the current president plans to expand.
Trump said for the New York Times: “Now here’s the good news. We’ve created associations, millions of people are joining associations. Millions. That was formerly in Obamacare or didn’t have insurance. Or didn’t have healthcare. Millions of people. It could be as high as 50%. You watch. So that’s a big thing.”
Association health plans and short-term health policies are at the primary focus of Trump wish to increase choices, as well as lower costs of health insurance, chipping away at the Affordable Care Act. Nobody has joined the new associations yet however, as the Trump administration still has to act on the order.
Trump executive order healthcare was revealed as an executive order in last October, after Congress had no more time to revoke and replace Obamacare. The federal agencies still have not released the proposed regulations, although Trump allowed them 60 days to consider it.
The Department of Health
The Department of Health and Human Services nor the Department of Labor and Office of Management and Budget commented.
Some health policy experts expect the rules to arrive this month, after which it could take weeks and even months before the plans actually appear on the market.
Trump said how the order will boost competition, allow more options and lower the price of premiums. Critics, on the other hand, argue that these will provide worse coverage, therefore raising the cost of Obamacare exchanges.
Much will depend on new regulations are written. Here is an example of a policy Americans could buy if this plan is realized:
Association health plans
Association health plans, which trade organizations or interest groups usually sponsor, are great for small businesses as well as individuals because it will allow them to leverage their greater numbers for less expensive policies. They have existed for decades. However, they have an unfortunate history of insolvency and fraud. Their advantage was eliminated by the Affordable Care Act, as it required that plans meet the same regulations as the market for small business insurance.
The Trump administration may also amend the rules that are governing the plans, and make them no longer subject to the state regulation. The nationwide plans would instead come under the federal oversight that is responsible for large-employer policies that are not subject to all Obamacare mandates.
In addition, small businesses with sicker workers could pay higher premiums than those with a healthier workforce. Companies cannot charge or exclude higher premiums to individual workers, based on their pre-existing conditions. Therefore, the rates the employer pays as a whole are based on the workforce health status. Under Obamacare, the premium of a small business is not determined the medical history of the workers.
Association plans may also cherry pick the small businesses that have younger and healthier employees, by charging extremely high premiums, or offering skimpier benefits to those with older and sicker workers.
Short-term health plans
The Obama administration limited their duration to no more than 90 days, making them less attractive to consumers. The new order will probably lift this cap, enabling them to buy policies lasting just under a year.
The advantage of this is that these plans do not have to adhere to Obamacare regulations, meaning the consumers have a wider range of options for lower monthly rates.
The disadvantage is however that these policies can exclude those with pre-existing conditions, or base the rates on medical history. Skimpier benefits are also a possibility.
Cori Uccello, a senior health fellow at the American Academy of Actuaries, said, “If someone is healthy, they could have the option of a less expensive, less comprehensive policy, but there is a risk.”
These plans are already around as well, but those under them are not considered insured and may suffer the Obamacare penalty. Starting next year, however, the Congress will effectively repeal the individual mandate requiring that nearly all Americans have coverage.
States probably wish to retain the oversight of these policies, and could even impose their own rules, according to Sabrina Corlette, who is a research professor at Georgetown Health Policy Institute. New York and New Jersey currently do not let insurers sell the short-term plans if they do not comply with Obamacare.
For now, at least two major insurance companies said they wish to expand their offerings.
UnitedHealth (UNH) has around 300,000 members. Their performance is strong and according to Dan Schumacher, the president, it is “generally in keeping with our broader portfolio”. UnitedHealth is “excited” to see the extended duration of short-term policies.
CEO of Aetna (AET) Mark Bertolini said that his company wants to jump-start their short-term policy offerings. He said, “We are actually looking at re-energizing a program we had prior to the ACA, but [with] more [of] a focus [on a] short-term, one-year kind of plan, or transition plan, versus just the skinny benefit, which leaves a lot of people at some moral harm at some point. And so we have to think about what kind of plan it would look like … we’re already all over that. As soon as the executive order came out, we were on top of it.”
The executive order would also expand employers’ ability to give workers cash to buy coverage elsewhere under a system known as health reimbursement arrangements. The agencies were given 120 days to propose these regulations.